"Spies Like Us"
    Business Week

By: Carole Ashkinaze

Spies Like Us
 
You don't need to be James Bond or IBM to use competitive intelligence. Here's how it works
Two old trucks, $16,000, and a great idea--that was all Greg Laube needed to launch The Paint Bull in 1989. Competition was the last thing on his mind. After all, his special system for touching up scuffed bumpers and key scratches quickly turned into a huge hit with used-car dealers. Sales took off and kept growing--until 1994. That was when Laube suddenly realized he wasn't alone anymore. He was starting to lose customers to competitors he never knew he had. "People began to tell us they were 'looking at someone else,"' says Laube. But who?

Laube instituted a crash plan to gather intelligence. Relying mostly on information from customers, trade shows, and automotive magazines, he and his staff combed the marketplace for competitors--and phoned every single one, without identifying themselves as rivals, to find out what they were offering. Then they rigorously reviewed their own products and services to see how they could be improved. One resulting product: a trademarked repair system called MicroPatch®, which reduces the time for a paint touch-up to one hour.

Since then, Laube has moved from what he calls "primitive" intelligence gathering to a more formal system, hiring computer whiz Peter Avery in 1997 to head up The Paint Bull's intelligence efforts. Avery, who is also in charge of vendor sales, keeps tabs on their competitors and the automotive industry with Web monitoring services that cost, in total, about $200 a month.

For years, big corporations have practiced competitive intelligence (or CI)--a system for gathering information that affects a business, analyzing the data quickly, and then taking action. Used properly, CI can speed a company's reaction time to changes in the marketplace, help preempt and outmaneuver competitors and protect a business' own secrets from prying eyes. To be sure, CI is a billion-dollar growth industry of seminars, books, and high-priced consultants. But small companies such as The Paint Bull are learning that CI can help them, too--and it doesn't have to cost a bundle. "CI enters the small-business person's world first as a mental model, as a way of thinking about who you are in the world," says Pamela J. Noe, a Central Intelligence Agency officer on loan to George Washington University, where she's teaching small-business owners and others the discipline of competitive intelligence. "You may start playing around on the Internet, and discover not only that you have competitors all over the world--'My God, I'm not the only one who does this!'--but that your customers can do the same." Noe teaches, among other things, how to protect trade secrets and spin out competitive scenarios, imagining new products that could threaten yours--even if they haven't been invented yet.

More than anything, competitive intelligence, says Laube, is "a catalyst to product innovation." He credits such astute use of information with helping The Paint Bull discover 10 new competitors, beat rivals' special offers, and develop new services, such as training and research, to stay ahead of the pack. Without those steps, he adds, "I would have lost 40% of my market share." Instead, The Paint Bull has grown to $3.1 million in annual sales with 42 employees.

Additionally the article went on to demonstrate the CIA's involvement to further develop competitive intelligence for the benefit of business and industry.

NOE: Competitive intelligence "is not industrial espionage" - and can be rewarding without lawbreaking.

The Spies Have It

Q: You still work for the CIA. Are you teaching students how to spy?
A: Absolutely not. Competitive intelligence is not industrial espionage. This is not about clandestine information. You've got to comply with the laws. Don't violate a single law. You can be hugely successful without ever having to do that.

Q: Then what exactly is competitive intelligence and why do small businesses need it?
A: It's a system with which you constantly reevaluate what it is you do, and the environment in which you do it. Harry Truman created the CIA to integrate the information the government had in lots of different offices related to security and surprises. This concept is especially important to small businesses, which feel the impact of market fluctuations and competition sooner than large, diversified ones. You don't know what's around the corner. Your biggest threat may come from a product that doesn't exist yet.

Q: How can small companies afford competitive intelligence?
A: You don't have to set up a huge, sweeping program all at once. If you have a phone, a PC, and an Internet hookup with e-mail, and you're going out to seminars, lunches, and other events, you've got the basics. Now what you need is to pause, evaluate what you've got, scrub all your previous assumptions, and make notes.

Q: How can you protect your trade secrets?
A: The Economic Espionage Act of 1996 provides stiff penalties for theft of trade secrets, but only if you've taken "reasonable measures" to protect them. Start with an inventory of your trade secrets. Make sure your employees know what they are. Write them down.

Q: How can I learn what my competitors are up to?
A: You can legally ask anybody anything as long as you don't misrepresent yourself. You can go to your competitor's firm and say, "What percentage of the market do you think you're going to get with your new product next year?" And you know what? Eighty percent of the time they'll tell you. It's amazing.